Daniels Friday notified the Centers for Medicare and Medicaid Services Friday of Pence's conclusion that creating a state-run exchange would cost too much. The notification likely means the federal government alone will design the online marketplace that Indiana residents will use to choose among health insurance policies when coverage begins in 2014 under President Barack Obama's new health care plan.

Daniels said he ceded the decision to his successor because the new system will go into effect during Pence's term.

The federal government had originally set Friday as the deadline for choosing a state-run plan, but this week extended the deadline until next month. Pence has also indicated little interest in a state-federal partnership, an option chosen by some states.

In a letter explaining his objections to a state-run system, Pence wrote: "Without knowing more details on the cost and nature of state-based exchanges, it is possible that our state could be placed in the untenable position of serving as the new administrator of a new federal healthcare bureaucracy over which we have little control." He estimated that building the online marketplace, which would resemble Travelocity, would cost $50 million.

Rep. Ed DeLaney, Indianapolis Democrat, complained that workers will be paid in Washington to design the state's system rather than in Indiana.

Of Pence, he said: "I understand that he and many other Republicans are angry about the result of the election and they're angry about health care insurance, but they've got to get over it."